Home prices rose 1.6% in May as high mortgage rates and prices pose 'significant headwind'

Home price growth continued to trail inflation in May, but higher mortgage rates sidelined buyers during the traditionally busy spring buying and selling season. 

The S&P Cotality Case-Shiller 20-City Composite Home Price Index, which measures home prices in 20 of the nation's largest metropolitan areas, rose 1.6% in May from a year earlier, according to data released Tuesday.

The national index, which encompasses a broader range of metro areas, jumped 1.1%. 

May's figures cover a period when prospective buyers and sellers were feeling some of the biggest effects of the Iran war. Higher oil prices sent broad inflation in May surging to 4.2%, and mortgage rates settled at around 6.5%, a level high enough to discourage many prospective buyers. 

Read more: How to get the lowest mortgage rates right now

"Affordability remains a significant headwind for the housing market," Rebecca Kaufman, associate director of commodities at S&P Dow Jones Indices, said in a statement. "Against this backdrop, housing demand remains constrained, elevated borrowing costs continue to discourage potential homebuyers, and housing values decline in real terms for existing homeowners."

Although national measures of home price appreciation remain sluggish, price trends have diverged around the country. Home prices in many Midwestern and Northeastern cities are still rapidly appreciating, while prices are flat or falling in much of the Southeast and West. 

Home prices in Chicago jumped 6.9% year over year in May, the most of any large metro area, followed by New York and Cleveland, where prices rose 4.2% and 3.1%, respectively. Las Vegas saw the steepest annual decline at 1.9%, followed by an 1.8% drop in Seattle.

Claire Boston is a Senior Reporter for Yahoo Finance covering housing, mortgages, and home insurance.

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